Browsing articles tagged with "service-disabled veteran owned broker dealer Archives - Mischler Financial Group"
Aloha GO Bonds-Hawaiian Style-Muni Deals Scheduled This Week
August 2017      Muni Market   

Mischler Muni Market Market Update for the week of 08-14-17 looks back to last week’s metrics and provides a focused lens on muni bond new issuance scheduled for the upcoming week, with a “Aloha” to GO Bonds-Hawaiian Style, as City and County of Honolulu, Hawaii is scheduled to issue $411 mil in tax exempt and taxable general obligation bonds. As always, the Mischler Muni Market Outlook offers public finance investment managers, institutional investors focused on municipal debt and municipal bond market participants a summary of the prior week’s municipal debt activity, including credit spreads and money flows, and a curated view of pending municipal finance offerings tentatively scheduled for this week’s issuance.

Last week muni volume was about $5.6 billion. This week volume is expected to be $6.7 billion. The negotiated market is led by $411.0 million tax exempt and taxable general obligation bonds (GO Bonds) for the City and County of Honolulu, Hawaii. The competitive market is led by $1.3 billion general obligation bonds for the State of Maryland on Wednesday.

Below and attached is neither a recommendation or offer to purchase or sell securities. Mischler Financial Group is not a Municipal Advisor. For additional information, please contact Managing Director Richard Tilghman at 203.276.6656

For reading ease, please click on image below aloha-GO-Bonds-Hawaiin Style-Muni Deals This Week

Since 2014 alone, minority broker-dealer Mischler Financial Group Inc.’s  presence across the primary Primary Debt Capital Markets (DCM) space has included underwriting roles in which Mischler has led, co-managed and/or served as selling group member for more than $600 Billion (notional value) in new debt and preferred shares issued by Fortune corporations, as well as debt issued by various municipalities and US Government agencies.

Mischler Financial Group is the securities industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans. Mischler is also a federally-certified Service-Disabled Veteran Owned Business Enterprise (SDVOBE).  Mischler Muni Market updates are provided as a courtesy to institutional clients of Mischler Financial Group, Inc.

This document may be not reproduced in any manner without the permission of Mischler Financial Group. Although the statements of fact have been obtained from and are based upon sources Mischler Financial Group believes reliable, we do not guarantee their accuracy, and any such information may be incomplete.  All opinions and estimates included in this report are subject to change without notice.  This report is for informational purposes and is not intended as an offer or solicitation with respect to the purchase or sale of any security.   Veteran-owned broker-dealer Mischler Financial Group, its affiliates and their respective officers, directors, partners and employees, including persons involved in the preparation of this report, may from time to time maintain a long or short position in, or purchase or sell a position in, hold or act as market-makers or advisors or brokers in relation to the securities (or related securities, financial products, options, warrants, rights, or derivatives), of companies mentioned in this report or be represented on the board of such companies. Neither Mischler Financial Group nor any officer or employee of Mischler Financial Group or any affiliate thereof accepts any liability whatsoever for any direct, indirect or consequential damages or losses arising from any use of this report or its contents.

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BAML Leads $11.8b Day for Investment Grade Issuance-Mischler DCM Comment
July 2017      Debt Market Commentary   

Quigley’s Corner 07.18.17  -Today’s Investment Grade Issuance: BAML Takes Top Spot in Day’s $11.8b Investment Grade New Issue Activity

Below is the opening extract from Quigley’s Corner aka “QC”  Tuesday July 18, 2017  edition distributed via email to institutional investment managers and Fortune Treasury clients of Mischler Financial Group, the investment industry’s oldest minority broker-dealer owned and operated by Service-Disabled Veterans.
Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”the QC is one of three distinctive market comment pieces produced by Mischler Financial Group.The QC is a daily synopsis of everything Syndicate and Secondary as seen from the perch of our fixed income trading and debt capital markets desk and includes a comprehensive “deep dive” with optics on the day’s investment grade corporate debt new issuance and secondary market data encompassing among other items, comparables, investment grade credit spreads, new issue activity, secondary market most active issues, and upcoming pipeline. To receive Quigley’s Corner, please email: rkarr@mischlerfinancial.com or via phone 203.276.6646

 

Investment Grade New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and July

NICs, Bid-to-Covers, Tenors, Sizes and Average Spread Compression from IPTs thru Launches

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending July 12th              

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline Highlights

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

Today’s IG Corporate dollar DCM finished with 4 issuers pricing 9 tranches between them totaling $11.80b.  The SSA space added 1 well-telegraphed issue in the form of the Kingdom of Sweden’s $2.75b 2-year thereby bringing the all-in IG day totals to 5 issuers, 10 tranches and $62.89b.  CDX IG reached another new tight today closing at 57.349 contracting  <0.128>.

Bank of America posted Q2 earnings early this morning beating on EPS ($0.46 vs. $0.43) and revenues ($22.829b vs. $21.781b) and fixed income trading ($2.254b vs. $2.22b) although net interest income was off ($11b vs. $11.34b).  Our nation’s second largest bank as measured by AUM, wasted no time in capitalizing on the overall positive earnings by announcing a mega $7.00b 4-part.  As I wrote here in last Thursday’s “QC” in reviewing Bank of America’s Q3 Outlook call as told by Kevin Barthelmes of BAC Syndicate, “2-, 3- and 5-year FRN issuance is up 40% to 45% YTD with lots of that volume originating from Asia. Notably, we are also expecting more callable structures, for example, 2NC1 and 3NC2 issuance.” Lo and behold mid-morning today BAC announced a 4nc3 FRN, a 4nc3 fixed-to-FRN, a 6nc5 and 11nc10.  So, there really is good stuff here in the “QC” folks.

Here’s how this week’s IG Corporate volume numbers measure up against the WTD and MTD syndicate estimates:

  • The IG Corporate WTD total is 105.68% of this week’s syndicate midpoint average forecast or $30.35b vs. $28.72b.
  • MTD we’ve priced 74.51% of the syndicate forecast for July or $62.89b vs. $84.40b.
  • There are now 8 IG Corporate, Yankee and/or SSA new issues in the IG credit pipeline. 

Today’s IG Primary & Secondary Market Talking Points

  • DBS Group Holdings Ltd., dropped the 5yr fixed rate tranche from today’s earlier announced two-part 5yr FXD/FRN securing sufficient 5yr funding in the FRN tranche.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 9 IG Corporate-only new issues, excluding HIS, was <16.44> bps.
  • BAML’s IG Master Index tightened 1 bp to +110 vs. +111.  +106 represents the post-Crisis low dating back to July 2007.
  • The average spreads across 5 of the 19 major industry sectors tied post-Crisis lows today with a sixth setting a new low. That’s 31.5% of the sectors.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.05.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +153 vs. +154.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $14.8b on Monday versus $11.2b on Friday and $14.0b the previous Monday.
  • The 10-DMA stands at $14.1b. 

Global Market Recap 

  • U.S. Treasuries – Rally led by the 10yr on low inflation & political chaos in the U.S.
  • Overseas Bonds – JGB’s improved except the 2yr. Back-to-back rallies in Europe.
  • 3mth Libor – Set at the highest yield since March 2009 (1.30694%).
  • Stocks – Mixed heading into the close.
  • Overseas Stocks – China & HK higher. Japan lower. Poor session in Europe.
  • Economic – Import price index MoM was negative for the 3rd time in 4 months.
  • Overseas Economic – China good & Japan bad. EU ZEW’s down. U.K. CPI lower.
  • Currencies – A BAD & I mean B-A-D day for the USD. FX’s markets were on the move.
  • Commodities – took advantage of the weaker USD.
  • CDX IG: -0.10 to 57.38
  • CDX HY: +0.68 to 323.09
  • CDX EM: -0.13 to 195.13

*CDX levels are as of 3:30PM ET today.

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
Asian Political Tensions
·          N. Korea launches ICBM on July 4th. Continues development, improving accuracy & distance in defiance of G-20 protests; Lack of Chinese mediation; Recent Otto Warmbier death; U.S. sanctions certain Chinese banks and individuals to influence PROC pressure on NOKO.
ELEVATED
BREXIT Fallout
·          U.K. PM May is on the hot seat. Macron-Merkel coalition to squeeze U.K. for all it can.
CAUTION
“U.S. political gridlock”
Escalating war in Syria
·          Trump financial, healthcare, tax and infrastructure reform challenges & consensus GOP support to pass legislation questioned

·          U.S. Senate sanctions Iran for missile testing and supporting terrorism; also expands sanctions against Russia in 98-2 vote. Russia in expansion mode.

·          GCC Crisis as Saudis, UAB, Egypt, Bahrain & 5 others accuse Qatar of backing terrorism; Land, air and sea blockade. Demands include closing its Al Jazeera network & a Turkish military base,severing ties w/Muslim Brotherhood, Hezbollah, al-Qaeda & ISIS.

·          Italian debt-to-GDP ratio is 133% – world’s 3rd highest.

·          Despite destroying the Caliphate, ISIS will be scattered across a wider MENA region and Europe.

·          Cybercrime, ransomware, viruses & hacking are winning cyber wars. The latest attack hit four continents, law firms, food companies, power grids, pharma & gov’ts (Ukraine & Russia).

·          Central banks shrinking balance sheets/higher volatility in 2H17.

MODERATE ·          China hard landing – rising corporate debt have the OECD and IMF concerned.

·          Venezuela – low oil prices/Maduro resistance impacting ability to repay debt; civil unrest.

MARGINAL
2018 U.S. Recession
·          Increased chance of 2018 U.S. recession in light of recent very hawkish Fed-speak; “Maybe” one more rate hike in 2017; lack of inflation and $4.5 trillion balance sheet unwind are concerns.

 

Syndicate IG Corporate-only Volume Estimates This Week and July

 

IG Corporate New Issuance This Week
7/17-7/21
vs. Current
WTD – $30.35b
July 2017
Forecasts
vs. Current
MTD – $62.89b
Low-End Avg. $27.78b 109.25% $83.87b 74.99%
Midpoint Avg. $28.72b 105.68% $84.40b 74.51%
High-End Avg. $29.66b 102.33% $84.92b 74.06%
The Low $20b 151.75% $70b 89.84%
The High $36b 84.30% $111b 56.66%

 

 

Have a great evening!

Ron Quigley, Managing Director and Head of Fixed Income Syndicate

 

Below please find my synopsis of everything Syndicate and Secondary from today’s debt capital markets, including the investment grade corporate bond data drill down as seen from my seat here in Syndicate, Sales and DCM.

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BAML Q3 Debt Market Issuance View-Expectation Management 101
July 2017      Debt Market Commentary   

Quigley’s Corner 07.13.17– Day’s IG DCM Activity + Dialed In to BAML Q3  Debt Market Issuance Outlook 


Investment Grade New Issue Re-Cap

The BAML Q3 Outlook Call- A View Courtesy of Mother Merrill Top Guns

Today’s IG Primary & Secondary Market Talking Points

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and July

NICs, Bid-to-Covers, Tenors, Sizes and Average Spread Compression from IPTs thru Launches

This Week’s IG New Issues and Where They’re Trading

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending July 5th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

Today’s IG Corporate dollar primary market featured only one domestic issuer – Marathon Oil – among two other Yankee issuers.  3 issuers priced 4 tranches between them totaling $2.30b.  The SSA space contributed 1 deal, the well-telegraphed $5.00b 4-part for JBIC that boosted the session’s all-in IG Corporate and SSA day total to 4 issuers, 8 tranches and $7.30b.

Here’s how this week’s IG Corporate volume numbers measure up against the WTD and MTD syndicate estimates:

  • The IG Corporate WTD total is 146.79% of this week’s syndicate midpoint average forecast or $26.79b vs. $18.25b.
  • MTD we’ve priced 38.55% of the syndicate forecast for June or $32.54b vs. $84.40b.
  • There are now 5 IG Corporate, Yankee and/or SSA new issues in the IG credit pipeline.

So, tomorrow we finally kick off six-pack U.S. bank earnings with Citigroup, J.P. Morgan and Wells Fargo reporting.  Next Tuesday is BAML and Goldman Sachs followed by Morgan Stanley on Wednesday.  Hopefully these market leaders break open the issuance drought in short order and subsequently lead the way for all the issuance universe who they bank up to the traditional mid-August thru Labor Day slow-down.

The BAML Q3 Outlook Call
*Please note that this sub section is discerned from my own note taking. I own any/all discrepancies or inaccuracies vs. the call although I represent there should be none.  Thanks! -RQ

Today was also BAML’s always meaningful Quarterly Outlook Call. Here’s a brief run-down:


High Yield Issuance

High Yield issuance is up 20% YoY but all related to Q1 volume. Looking at Q2 business, issuance is down $10b YoY.  From a sector perspective HY saw big pick-ups in the Industrial, Healthcare and Energy sectors.  There was a notable fall-off in the TMT sector. The remaining sectors have been fairly consistent YTD.  Two-thirds of high yield issuance has been motivated by re-financings. M&A volumes continue to represent about 20% of HY issuance volume. Pick-ups were seen in triple-“CCC” rated issuance to $17b from $4b.  Euro issuance represented about €32b and a hefty £10b. Euro and Sterling issuance continues to illustrate overall growth for HY issuance.

BAML holds strong convictions for re-financing trades as issuers can lock in highly favorable long-term rates in here and looking forward. $50b is committed to M&A financings for the remainder of the year predominantly focused on longer tenors with $10b of that in new HY issuance.

……and now for the High Grade Issuance Outlook

BAML Syndicate’s Kevin Barthelmes did a great job pinch hitting for Dan Mead today in reviewing YTD new issuance as well as the 2H 2017 Outlook.

Here is all the stuff you WANT and NEED to know:

YTD IG ex-SSA supply volume for the first half of 2017 is up 1.8% YoY.  (The “QC” IG Corporate-only count is $754b YTD). BAML had called for a 5-7% decline in IG issuance for 2017 at the end of last year.  The YTD split is as follows: $430b (Corporates) down <3.5%> YoY and $300b (Financials) up 10% versus 2016.  Issuance pressure was seen mostly from the M&A space that was markedly down year-over-year.  YTD M&A driven issuance is expected to be $140b-145b or 10% of IG overall supply. In 2016 we saw $290b which represented 20% of issuance in 2016.

In terms of the back half of 2017, the themes are similar to Q2 2017. Expectations are for corporate supply to be down on the year given the decline in M&A. This July, we expect issuance to be down about 12% versus last year. We also experienced a robust August and September in 2016 which is not expected this year. Keep in mind that Q1 2017 was a record breaking quarter in terms of new issuance. Additionally, Q4 2016 saw companies motivated to price deals ahead of last November’s Presidential election that boosted volumes. BAML does not expect a repeat of July through September again this year.

FRNS and Callable Structures En Vogue

2-, 3- and 5-year FRN issuance is up 40% to 45% YTD with lots of that volume originating from Asia. Notably, we are also expecting more callable structures, for example, 2NC1 and 3NC2 issuance. Expect to see a continuance of that in the second half of the year. It does not feel as though issuers are getting worried about rates at all. Dialogue outside of M&A has been primarily on liability management issuance of which we’ve had roughly $40b YTD.  Expect another $40b in LM issuance in the second half as well which would represent a 10-15% increase versus 2016.

So, to recap, here are the issuance outlook themes for the second half of 2017:

  • Lack of supply
  • Continued FRN demand and callable structures
  • Liability Management issuance
  • Strong Capital/Low Growth

Thank you to all those a who contributed on today’s BAML Outlook Call and in particular I’d like to send shout-outs to the always differentiating intel and commentaries from those who spoke from the sectors I cover here at Mischler – namely Hima Inguva (Banks) and Peter Quinn (Electric Utilities & Power). Listening is always the most informative form of communication.

 

Today’s IG Primary & Secondary Market Talking Points

 

  • For the week ended July 5th, Lipper U.S. Fund Flows reported an inflow of $2.299b into Corporate Investment Grade Funds (2017 YTD net inflow of $71.493b) and a net outflow of $1.144b from High Yield Funds (2017 YTD net outflow of $8.865b).
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 4 IG Corporate-only new issues, excluding HIS, was <25.625> bps.
  • BAML’s IG Master Index was unchanged at +112.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.06.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +155.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $18.7b on Wednesday versus $17.5b on Tuesday and $13.7b the previous Wednesday.
  • The 10-DMA stands at $14.7b.

 

Global Market Recap

 

  • U.S. Treasuries – Draghi, Yellen & supply hurt USTs today.
  • Overseas Bonds – 30yr JGB rallied 2.6 bps. EU lost ground with Peripherals leading the way.
  • Stocks – U.S. stocks closed with gains.
  • Overseas Stocks –  Another rally for Hang Seng. Europe closed with gains.
  • Economic – PPI was tame. Yellen sounded more hawkish today vs. yesterday.
  • Overseas Economic – China data was very good. There is no inflation in Europe
  • Currencies: USD closed mixed vs the Big 5. DXY Index hit low since Sept
  • Commodities: Good day for cruder oil. Metal closed red & wheat was hammered
  • CDX IG: -1.08 to 58.83
  • CDX HY: -4.06 to 328.42
  • CDX EM: -1.21 to 196.92

*CDX levels are as of 3:30PM ET today.

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
Asian Political Tensions
· N. Korea launches ICBM on July 4th. Continues development, improving accuracy & distance in defiance of G-20 protests; Lack of Chinese mediation; Recent Otto Warmbier death; U.S. sanctions certain Chinese banks and individuals to influence PROC pressure on NOKO.
ELEVATED
BREXIT Fallout
· U.K. PM May is on the hot seat. Macron-Merkel coalition to squeeze U.K. for all it can. Italian domestic bank bail-out outside EU “rule of law” concern for EU stability.
CAUTION
“U.S. political gridlock”
Escalating war in Syria
· Trump financial, healthcare, tax and infrastructure reform challenges & consensus GOP support to pass legislation questioned/Dems lose 4 consecutive special elections despite media bias.

· U.S. Senate sanctions Iran for missile testing and supporting terrorism; also expands sanctions against Russia in 98-2 vote. Russia in expansion mode.

· GCC Crisis as Saudis, UAB, Egypt, Bahrain & 5 others accuse Qatar of backing terrorism; Land, air and sea blockade.

· Italian debt-to-GDP ratio is 133% – world’s 3rd highest. €17bn gov’t. bail out of two Italian banks.

· Closing in on ISIS is very problematic as it is scattering across a wider MENA region and Europe.

· Cybercrime, ransomware, viruses & hacking are winning cyber wars. The latest attack hit four continents, law firms, food companies, power grids, pharma & gov’ts (Ukraine & Russia).

· Central banks shrinking balance sheets/higher volatility in 2H17.

MODERATE · Trump/Putin meet at G-20 Summit in Hamburg last week. Move toward mutual cease fire in Syria  to identify de-escalation zones; discussed hacking controversy and agreed to improved relations.

· China hard landing – rising corporate debt have the OECD and IMF concerned.

Venezuela – tumbling oil prices/Maduro resistance impacting ability to repay debt; civil unrest.

MARGINAL
2018 U.S. Recession
Increased chance of 2018 U.S. recession in light of recent very hawkish Fed-speak; sights  on one more rate hike in 2017; concerns over lack of inflation and unwinding $4.5 trillion b/c.

 

Syndicate IG Corporate-only Volume Estimates This Week and July

 

IG Corporate New Issuance This Week
7/10-7/14
vs. Current
WTD – $26.79b
July 2017
Forecasts
vs. Current
MTD – $32.54b
Low-End Avg. $17.83b 150.25% $83.87b 38.80%
Midpoint Avg. $18.25b 146.79% $84.40b 38.55%
High-End Avg. $18.67b 143.49% $84.92b 38.32%
The Low $15b 178.60% $70b 46.49%
The High $28b 95.68% $111b 29.32%

 

 

Have a great evening!

Ron Quigley

 

Below please find my synopsis of everything Syndicate and Secondary from today’s debt capital markets, including the investment grade corporate bond data drill down as seen from my seat here in Syndicate, Sales and DCM. (more…)

Day’s IG Corporate Debt Issuance Leaderboard: Deutsche Bank
July 2017      Debt Market Commentary   

Quigley’s Corner 07.10.17 – Break in “Summer Slowdown”; IG Issuers Are Back, Deutsche Bank Grabs Day’s #1 Spot Corporate Debt Issuance  

Investment Grade Corporate Bond New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and July

NICs, Bid-to-Covers, Tenors, Sizes and Average Spread Compression from IPTs thru Launches

This Week’s IG New Issues and Where They’re Trading

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending July 5th

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

 

Investment Grade New Issue Re-Cap

Following today’s 9 IG Corporate issuers announcing 17 tranches between them totaling $11.99b some actually proffered, “What summer slowdown?”  Today was a welcome return of robust activity for our dollar IG DCM. With the six-pack U.S. banks set to begin releasing Q2 earnings this Friday with Citigroup, J.P. Morgan and Wells Fargo up to bat first, it can’t come soon enough.  Next Tuesday, July 18th BAML and GS follow and MS announces on Wednesday, July 19th.  Mischler Financial is proud to announce that it served as a Co-Manager on today’s two-part $2.25b 3-year FXD/FRN for Deutsche Bank/NY Branch. So, without further ado, of all today’s IG issuance Deutsche Bank/New York branch is the Deal….of….the….Day!

We just completed four weeks that finished as the 1st, 3rd, 4th and 6th ranked slowest weeks of the year.  It’s been that slow for issuance, despite credit spreads grinding tighter and tighter.  The average Banking sector issue reached an average spread of T+98 which matches it’s post Crisis low; the Insurance sector also tied its PC low at +120 while both the Leisure and Services sectors set new PC tights at +112 and +109 respectively.  One year ago today the top four IG asset classes were an average +43.75 bps from their post Crisis lows. This morning they are a mere 7 bps from their PC tights or +36.75 bps tighter.  Looking across the major 19 IG sectors, a year ago today they were an average +55.84 bps from their PC tights while this morning they are now only 10.84 bps away or <45> bps tighter as a group.  Those are a pair of very dramatic statistics. There are currently 14 new issues in the credit pipeline split 12 to 2 insofar as Yankee vs. SSA.

Let’s now take a look at how this week’s IG Corporate volume numbers stack up against the WTD and MTD syndicate estimates:

 

  • The IG Corporate WTD total is 65.70% of this week’s syndicate midpoint average forecast or $11.99b vs. $18.25b.
  • MTD we’ve priced 21.02% of the syndicate forecast for June or $17.74b vs. $84.40b.
  • There are now 14 IG Corporate, Yankee and/or SSA new issues in the IG credit pipeline.

 

Today’s IG Primary & Secondary Market Talking Points

 

  • IHS Markit Ltd. upsized today’s tap of its outstanding 4.75% 144a/REGS Senior Notes due 2/15/2025 to $300mm from $250mm at pricing. The total outstanding amount is now $800mm
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 16 IG Corporate-only new issues, excluding HIS, was <17.36> bps.
  • BAML’s IG Master Index tightened 1 bp to +112 vs. +113.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.07.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +154 vs. +155.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $14.5b on Friday versus $17.5b on Thursday and $12.6b the previous Friday.
  • The 10-DMA stands at $14.3b.

 

Global Market Recap

 

  • U.S. Treasuries – Better bid led by the 7yr on a quiet day.
  • Overseas Bonds – JGB’s down except the 30yr. European bonds finally had a good day.
  • Stocks – Better bid lead by the NASDAQ heading into the close.
  • Overseas Stocks – Asia closed mixed. Europe closed with gains.
  • Economic – Not a factor today.
  • Overseas Economic – China inflation unchanged. Japan mixed. Europe non-event.
  • Currencies – The USD was little changed vs. the Big 5.
  • Commodities – Traded well during NY trading hours.
  • CDX IG: -0.03 to 61.61
  • CDX HY: -1.69 to 341.25
  • CDX EM: -4.25 to 201.53

*CDX levels are as of 3:30PM ET today.

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
Asian Political Tensions
·          N. Korea launches ICBM on July 4th. Continues development, improving accuracy & distance  in defiance of G-20 protests; Lack of Chinese mediation; Recent Otto Warmbier death; U.S.  sanctions certain Chinese banks and individuals to influence PROC pressure on NOKO.                      
ELEVATED
BREXIT Fallout
·          U.K. PM May is on the hot seat. Macron-Merkel coalition to squeeze U.K. for all it can. Italian  domestic bank bail-out outside EU “rule of law” concern for EU stability.
CAUTION
“U.S. political gridlock”
Escalating war in Syria
·          Trump financial, healthcare, tax and infrastructure reform challenges & consensus GOP support to pass legislation questioned/Dems lose 4 consecutive special elections despite so-called “media bias.”

·          U.S. Senate sanctions Iran for missile testing and supporting terrorism; also expands sanctions against Russia in 98-2 vote. Russia in expansion mode.

·          GCC Crisis as Saudis, UAB, Egypt, Bahrain & 5 others accuse Qatar of backing terrorism/ Yemen, Mauritius, Maldives, Mauritania and Maldives join in severing diplomatic ties.

·          Italian debt-to-GDP ratio is 133% – world’s 3rd highest. €17bn gov’t. bail out of two Italian banks.

·          Closing in on ISIS is very problematic as it is scatterring across a wider MENA region and Europe.

·          Cybercrime, ransomware, viruses & hacking are winning cyber wars. The latest attack hit four continents, law firms, food companies, power grids, pharma & gov’ts (Ukraine & Russia).

·          Central banks shrinking balance sheets/higher volatility in 2H17.

MODERATE ·          Trump/Putin meet at G-20 Summit in Hamburg last week. Move toward mutual cease fire in Syria; to identify de-escalation zones; discussed hacking controversy and agreed to improved relations.

·          China hard landing – rising corporate debt have the OECD and IMF concerned.

·          Venezuela – tumbling oil prices/Maduro resistance impacting ability to repay debt; civil unrest.

MARGINAL
2018 U.S. Recession
·          Increased chance of 2018 U.S. recession in light of recent very hawkish Fed-speak and sights on one more rate hike in 2017.

 

Syndicate IG Corporate-only Volume Estimates This Week and July

 

IG Corporate New Issuance This Week
7/10-7/14
vs. Current
WTD – $11.99b
July 2017
Forecasts
vs. Current
MTD – $17.74b
Low-End Avg. $17.83b 67.25% $83.87b 21.15%
Midpoint Avg. $18.25b 65.70% $84.40b 21.02%
High-End Avg. $18.67b 64.22% $84.92b 20.89%
The Low $15b 79.93% $70b 25.34%
The High $28b 42.82% $111b 15.98%

 

(more…)

Investment Grade New Issue Re-Cap 06.13.17 – Mischler Financial
June 2017      Debt Market Commentary   

Quigley’s Corner 06.13.17- Investment Grade New Issue Re-Cap

 

Investment Grade Debt New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

Global Market Re-Cap

Syndicate IG Corporate-only Volume Estimates

NICs, Bid-to-Covers, Tenors, Sizes and Average Spread Compression from IPTs thru Launches

This Week’s IG New Issues and Where They’re Trading

Indexes and New Issue Volume

Lipper Report / Fund Flows

IG Credit Spreads by Rating

IG Credit Spreads by Industry

Economic Data Releases

New Issue Pipeline

M&A Pipeline

Rates Trading Lab

 

 

Investment Grade New Issue Re-Cap – Sessions in Session; S&P & DOW Close at All-Time Highs; Nasdaq Within One Point!

The morning session was subdued with only 4 Corporate issuers tapping our IG dollar DCM pricing 4 tranches for a total of $2.40b.  The SSA space saw 3 issuers print 3 tranches for an additional $2.843b thereby bringing the all-in IG day totals to 7 issuers, 7 tranches and $5.243b.

  • The IG Corporate WTD total is now 51.99% of this week’s syndicate midpoint average forecast or $11.35b vs. $21.83b.
  • MTD we’ve now priced more than 54.51% after just the first two days of June or $49.595b vs. $90.98b.
  • There are now 3 IG Corporate, Yankee and/or SSA new issues in the IG credit pipeline.

 

Today’s IG Primary & Secondary Market Talking Points

 

  • The IADB upsized its 5-year Global FRNs new issue today to $600mm from a minimum $500mm at the launch.
  • Double “BB” rated HY asset class matched a new post credit low of +227.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 3 IG Corporate-only new issues, was <13.08> bps.
  • BAML’s IG Master Index tightened 1 bp to +118 versus +119.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.13.
  • Standard & Poor’s Investment Grade Composite Spread tightened 1 bp to +160 versus +161.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $13.2b on Monday versus $11.1b on Friday and $12.8b the previous Monday.
  • The 10-DMA stands at $15.4b.

 

Global Market Recap

 

  • U.S. Treasuries – closed mixed, little changed & with a flatter curve.
  • Overseas Bonds – JGB’s mixed. Gilts hit hard. Bunds down. Peripherals better bid.
  • 3mth Libor – Set at the highest yield (1.24556%) since March 2009.
  • Stocks – Solid gains for U.S. stocks led by the NASDAQ as of 3:30pm.
  • Overseas Stocks – Asia & Europe rallied except the Nikkei & FTSE (small losses).
  • Economic – PPI YoY 0.1% lower than last while core CPI YoY increased 0.2%.
  • Overseas Economic – Japan data weaker. U.K. CPI higher. EU & Germany ZEWs solid.
  • Currencies – USD mixed vs. the Big 5 & the DXY Index lost ground.
  • Commodities – The CRB hit its lowest level since April 2016. Crude oil improved.
  • CDX IG: -1.0 to 58.99
  • CDX HY: -1.86 to 321.27
  • CDX EM: -3.37 to 191.25

*CDX levels are as of 3:30PM ET today.

-Tony Farren

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
Asian Political Tensions
·           N. Korea continues missile tests with improving accuracy in defiance of protests in G-Zero world.
ELEVATED
BREXIT Fallout
·           U.K. PM May is on the hot seat but softer BREXIT talks are expected as a result.
CAUTION
“U.S. political gridlock”
Fed Balance Sheet
·           FOMC Rate Decision 2pm Wed. 6./14;  This week BOE, SNB & BOJ all expected to be unchanged.

·           GCC Crisis as Saudis, UAB, Egypt, Bahrain & 5 others accuse Qatar of backing terrorism/

Yemen, Mauritius, Maldives, Mauritania and Maldives join in severing diplomatic ties.

·           Trump’s pulling U.S. from Paris Climate Accord perceived as ceding leadership in G-0 world.

·           Trump tax reform challenges & consensus GOP support to pass legislation questioned.

·           Potential mid-term election loss to Dems in 11/2018 will impede any progress/GOP dissension.

·           U.S. partisan politics/gridlock/media bias against Trump/talk/tweet addiction and perjury.

·           Shrinking the Fed’s  balance sheet/higher volatility 2H17.

·           Italian debt-to-GDP ratio is 133% and threatens EU economic improvements/Five Star movement

setback in municipal election defeats on June 11th. EU skeptic support may have peaked.

·           ISIS becoming scattered across wider MENA region and more difficult to contain as a result.

·           U.K. terror alert lowered to “Severe” vs. “Critical.” Attack “highly likely” vs. “imminent.”

MODERATE ·           Venezuelan civil unrest

·           Russia meddling in international elections/Russia in expansion mode.

·           China hard landing?

MARGINAL
2018 U.S. Recession
·           Chance of a 2018 U.S. recession.

 

Syndicate IG Corporate-only Volume Estimates This Week and June

 

IG Corporate New Issuance This Week
6/12-6/16
vs. Current
WTD – $11.35b
June 2017
Forecasts
vs. Current
MTD – $49.595b
Low-End Avg. $21.00b 54.05% $90.04b 55.08%
Midpoint Avg. $21.83b 51.99% $90.98b 54.51%
High-End Avg. $22.67b 50.07% $91.92b 53.95%
The Low $15b 75.67% $75b 66.13%
The High $41b 27.68% $110b 45.09%

 

Below please find my synopsis of everything Syndicate and Secondary from today’s debt capital markets, including the investment grade corporate bond data drill down as seen from my seat here in Syndicate, Sales and DCM.

Have a great evening!

Ron Quigley

(more…)

Mischler Investment Grade Debt Market Commentary-Memorial Day 2017 Edition
May 2017      Debt Market Commentary   

“Quigley’s Corner” – Memorial Day 2017 Edition; Best & Brightest Sound Off re: Investment Grade Corporate Debt Forecast

mischler financial veteran-owned broker-dealer-memorial-day-2017

Investment Grade Debt New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

The “QC” Geopolitical Risk Monitor

Syndicate IG Corporate-only Volume Estimates This Week and May

The Best and the Brightest”  Syndicate Forecasts and Sound Bites for Next Week 

“Knowing the Past for the Future” – A Look at a Decade’s Worth of June IG Corporate and SSA Issuance

About Memorial Day

NICs, Bid-to-Covers, Tenors, Sizes and Average Spread Compression from IPTs thru Launches

This Week’s IG New Issues and Where They’re Trading

Indexes and New Issue Volume

Lipper Report / Fund Flows

IG Credit Spreads by Rating

IG Credit Spreads by Industry

Economic Data Releases

New Issue Pipeline

M&A Pipeline

Rates Trading Lab

 

A “thank you” goes out to all the 24 syndicate desk operatives who I polled this morning in the “QC” and who truly are the “Best and the Brightest” in our world of fixed income syndicate.  You see, SIFMA has declared today an early close ahead of Monday’s Memorial Day and as such we’re all looking to get out a bit ahead of the crowd so-to-speak.  They all complied and I have for your reading pleasure all 24 of those syndicate gurus patiently waiting below with their IG corporate new issue thoughts and forecasts not only for next week’s supply but for all of June as well.  So, sit back, relax and before your long weekend begins, get the data download as to what we expect for next week and month. After that enjoy this weekend with your families and please remember those sacrifices made by our nation’s men and women in uniform.  Please also take the time to read the Memorial Day piece above that says it all and the scroll below for General John A. Logan’s Memorial Day Order known as General Order No.11 May 5th, 1868 issued to honor our nation’s dead in the Civil War. It is the foundational starting point to our nation’s honoring our veterans on Memorial Day this Monday.

Thank you all! -RQ

 

Today’s IG Primary & Secondary Market Talking Points

 

  • BAML’s IG Master Index was unchanged at +118.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.13.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +161.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $17.2b on Thursday versus $19.7b on Wednesday and $15.2b the previous Thursday.
  • The 10-DMA stands at $16.9b.

 

The “QC” Geopolitical Risk Monitor

 

Risk Level/Main Factor Geopolitical Risks
HIGH
Asian Political Tensions
·     ISIS attack in Manchester, U.K. kills 22 wounds 59/U.K. on highest terror alert – “CRITICAL”

·     N. Korea “deployment and mass production” of ballistic missiles that could reach Japan & Guam.

·     Increasing tensions between North Korea (pop: 24mm) & South Korea (pop: 44mm).

·     Dictator Kim Jong-Un increasingly belligerent./Political disruption in Pacific Rim.

ELEVATED
BREXIT Fallout
·     Pres. Trump labels terrorists “Losers”; urges unity of all faiths to destroy radical factions.

·     Contentious U.K./EU negotiations over BREXIT. U.K. threatens to abandon talks.

·     2nd Scottish independence referendum Fall 2018 or Spring 2019. Also support for a vote in Ireland.

CAUTION
“Trump Factor”
Fed Balance Sheet
·     Trump tax reform challenges & consensus GOP support to pass legislation questioned.

·     FBI Controversy over firing of Comey & Russia scandal.

·     Potential mid-term election loss to Dems in 11/2018 will impede any progress/GOP dissension.

·     U.S. partisan politics/gridlock/media war against Trump

·     China hard landing?/L-T Moody’s downgrade to A1 vs. Aa3; outlook to “stable” from “negative.”

·     Shrinking Fed balance sheet/weaker technicals/wider spreads/higher volatility 2H17.

MODERATE ·     Syria/Terrorism/Venezuelan civil unrest/Brazil’s scandal & new recession.

·     Russia meddling in international elections/Russia in expansion mode.

MARGINAL
2018 U.S. Recession
“QUITALY”
·    Highly fractious Italian political landscape. 64 governments in 72 Post WWII years.

·    Italy’s 5 Star Movement & EU skeptic parties have more influence than in other EU elections.

·    As Italian elections approach, EU risks increase significantly/Italian debt-to-GDP ratio is 133%.

·    A “QUITALY” referendum vote?

·    Chance of a 2018 U.S. recession.

 

Syndicate IG Corporate-only Volume Estimates This Week and May

 

IG Corporate New Issuance This Week
5/22-5/26
vs. Current
WTD – $39.20b
May 2017
Forecasts
vs. Current
MTD – $148.138b
Low-End Avg. $29.69b 132.03% $122.27b 121.16%
Midpoint Avg. $30.48b 128.61% $123.42b 120.03%
High-End Avg. $31.27b 125.36% $124.56b 118.93%
The Low $20b 196.00% $100b 148.138%
The High $40b 98.00% $150b 98.76

The Best and the Brightest”  Syndicate Forecasts and Sound Bites for Next Week 

I am happy to announce that the “QC” once again received 100% unanimous participation from all 24 syndicate desks surveyed for today’s “Best & Brightest” edition!  19 of those participants are among 2017’s YTD top 21 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  23 are in the top 27 of that same table. The 2017 League table can be found on your terminals at “LEAG” + [GO] after which you select (US Investment Grade Corporates).  The participating desks represent 81.39% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they’re the ones with visibility.   It’s a great look at the week ahead.

*Please note that these are Investment Grade Corporates only. They do not include SSA issuance unless otherwise noted. As always “thank you” to all the syndicate desks that participated in today’s survey. My weekly technical data re-cap and question posed to the “Best and the Brightest” early this morning was as follows:

To frame this week’s survey question, here are this week’s IG new issue volume talking points:

  • The IG Corporate WTD total finished over 128% above this week’s syndicate midpoint average forecast or $39.200b vs. $30.48b.
  • MTD we’ve now priced just over 120% of the syndicate projection for May or $148.138b vs. $123.42b.
  • The all-in MTD total (IG Corporates plus SSA) currently stands at $171.038b ranking this May as the 7th highest volume month of all-time and second largest of 2017 behind January’s #1 overall ranking at $227.283b.
  • As of today, the YTD IG Corporate-only volume is $624.514b vs. $602.869 on May 25th, 2016 or 3.59% more than a year ago.
  • The all-in or IG Corporate plus SSA YTD volume is $778.656b vs $791.618 on May 25th, 2016 or <1.64%> less than last the year ago total.

Here are this week’s five key primary market driver averages from the 48 IG Corporate-only deals that priced:

  • NICS:  <5.45> bps
  • Oversubscription Rates: 3.74x
  • Tenors:  11.37 years
  • Tranche Sizes: $817mm
  • Spread Compression from IPTs to the Launch: <20.05> bps

Here’s how this week’s performance data compares against last week’s:

  • Average NICs tightened dramatically by <6.69> bps to <5.45> bps vs. 1.24 bps.
  • Over subscription or bid-to-cover rates, the measure of demand, increased 0.54x to 3.74x vs. 3.20x. 
  • Average tenors extended by 2.68 years to 11.37 vs. 8.69 years.
  • Tranche sizes decreased by $114mm to $817mm vs. $931mm.
  • Spread compression from IPTs to the launch/final pricing of this week’s 48 IG Corporate-only new issues tightened <2.24> bps to <20.05> bps vs. <17.81> bps.
  • Standard and Poor’s Investment Grade Composite Spreads tightened 1 bp to +161 vs. +162.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS thru this morning was unchanged at 1.13. 
  • Week-on-week, BAML’s IG Master Index tightened 1 bp to +118 vs. +119. 
  • Spreads across the four IG asset classes widened 0.25 bps to 13.25 bps vs. 13.00 as measured against their post-Crisis lows. 
  • The 19 major industry sectors also tightened 0.68 bps to 16.58 vs. 17.26.
  • For the week ended May 24h, Lipper U.S. Fund Flows reported an inflow of $2.089b into Corporate Investment Grade Funds (2017 YTD net inflow of $57.067b) and a net outflow of $567.960m from High Yield Funds (2017 YTD net outflow of $6.008b).
  • The OIS forward market – the best measure of implied probability for a June rate hike – is 80%.
  • Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 54 deals that printed, 43 tightened versus NIP for a 79.50% improvement rate while 6 widened (11.00%) and 5 were flat (9.50%).

Entering today’s Friday’s session here’s how much we issued this week:

  • IG Corps: $39.20b
  • All-in IG (Corps + SSA): $49.70b

This week lived up to expectations and to within 3.50% of the highest estimate which was $40b.  The headliner was of course this week’s terrible suicide bombing in Manchester, U.K. targeting children at a concert leaving 22 killed, 59 wounded and the U.K. on its highest national terror alert – “CRITICAL.” Trump controversies (FBI/Russia) remained backstage as his first foreign tour took center stage. The takeaways were the Middle East trip with net positives in Saudi Arabia and Israel. Trump also challenged European leadership to pay their fair share as NATO members.  He was vocal about the war on terror, labeling terrorists “LOSERS” and emphasized the unity of all faiths particularly Christians, Jews and Muslims to “eradicate terrorists from our planet.” The OIS forward market – the best measure of implied probability for a June rate hike – is 80%. North Korea continued test firing missiles; China was downgraded to “A1” from Aa3” by Moody’s though placed on outlook “stable” from “negative”; Italian elections are the next big event coming to Europe with a possible “QUITALY” on tap as myriad political factions share one commonality – leaving the EU in a nation that has seen 72 post WWII governments in 72 years!; Italian debt to GDP is a staggering 133%; There are 5 IG Corporate or Yankee new issues in the pipeline that we know about.

Along those lines today’s once a month TWO-PART question is, “what are your thoughts and numbers for BOTH NEXT WEEK and JUNE IG Corporate new issue volume? Thank you in advance for your time and contribution! 

I hope my daily “QC” and these Friday data downloads are helpful and informative to you.  Without your input this “QC” survey can’t get done.  I truly appreciate your meaningful sound bites that bring your numbers and ranges to life. A LOT of issuers that your firm banks read this every day and they love it!  I consistently receive positive feedback about the “QC” from them directly.  So, you should know that you are personally contributing to a much bigger picture while also helping the nation’s oldest Service Disabled Veteran broker-dealer build in a more meaningful and sustainable way especially during this – our Memorial Day Monthly Pledge Drive in which we donate 10% of our firm’s profits to veteran and other worthy causes.

Thank you very much and have a great Memorial Day weekend! -Ron

 

The “Best and the Brightest” in Their Own Words

Responses from fixed income syndicate desks and bookrunners canvassed in this week’s poll is available exclusively to QC email distribution list members. To receive the QC, please contact Rob Karr, Managing Director, Head of Capital Markets via rkarr@mischlerfinancial.com

 

 

“Knowing the Past for the Future” – A Look at a Decade’s Worth of June IG Corporate and SSA Issuance

 

  • Across the past ten years, all-in dollar-denominated IG Corporate plus SSA June new issuance averaged $84.61b.
  • Over the past five years, all-in IG June new issuance averaged $93.03b.
  • Over the past three years, all-in IG June issuance has averaged $113.65b.
  • The past three years, June IG Corporate only issuance averaged $98.37b.
  • June SSA issuance has averaged $15.27b across the last three years.

 

June
(Year)
All-in IG Issuance ($bn) IG Corps
only ($bn)
SSA
only ($bn)
2016 98.422 87.922 10.50
2015 111.906 97.156 14.75
2014 130.61 110.04 20.57
2013 42.19 40.24 1.95
2012 82.01 67.95 14.06
2011 51.24 31.33 19.91
2010 67.13 43.52 23.61
2009 119.77 64.29 55.48
2008 59.88 42.43 17.45
2007 83.00 63.07 19.93

*Note: includes TARP/TALF & FDIC insured issuance

 

About Memorial Day
mischler financial service-disabled veteran-owned broker-dealer
Memorial Day was the result of the Civil War with a strong desire to honor our nation’s dead. It was proclaimed by General John Logan commander of our U.S. National Army on May 30th, 1868.  New York was the first state to recognize Memorial Day in 1873. By 1890, all northern states recognized the Day.  The South refused to do so until after World War I when it was not solely to commemorate those lost in the Civil War. Memorial Day officially became a national holiday in 1971 thru an Act of Congress.

Here is how it all got started:

HEADQUARTERS GRAND ARMY OF THE REPUBLIC

General Orders No.11, WASHINGTON, D.C., May 5, 1868

 

  1. The 30th day of May, 1868, is designated for the purpose of strewing with flowers or otherwise decorating the graves of comrades who died in defense of their country during the late rebellion, and whose bodies now lie in almost every city, village, and hamlet church-yard in the land. In this observance no form of ceremony is prescribed, but posts and comrades will in their own way arrange such fitting services and testimonials of respect as circumstances may permit.

We are organized, comrades, as our regulations tell us, for the purpose among other things, “of preserving and strengthening those kind and fraternal feelings which have bound together the soldiers, sailors, and marines who united to suppress the late rebellion.” What can aid more to assure this result than cherishing tenderly the memory of our heroic dead, who made their breasts a barricade between our country and its foes? Their soldier lives were the reveille of freedom to a race in chains, and their deaths the tattoo of rebellious tyranny in arms. We should guard their graves with sacred vigilance. All that the consecrated wealth and taste of the nation can add to their adornment and security is but a fitting tribute to the memory of her slain defenders. Let no wanton foot tread rudely on such hallowed grounds. Let pleasant paths invite the coming and going of reverent visitors and fond mourners. Let no vandalism of avarice or neglect, no ravages of time testify to the present or to the coming generations that we have forgotten as a people the cost of a free and undivided republic.

If other eyes grow dull, other hands slack, and other hearts cold in the solemn trust, ours shall keep it well as long as the light and warmth of life remain to us.

Let us, then, at the time appointed gather around their sacred remains and garland the passionless mounds above them with the choicest flowers of spring-time; let us raise above them the dear old flag they saved from hishonor; let us in this solemn presence renew our pledges to aid and assist those whom they have left among us a sacred charge upon a nation’s gratitude, the soldier’s and sailor’s widow and orphan.

  1. It is the purpose of the Commander-in-Chief to inaugurate this observance with the hope that it will be kept up from year to year, while a survivor of the war remains to honor the memory of his departed comrades. He earnestly desires the public press to lend its friendly aid in bringing to the notice of comrades in all parts of the country in time for simultaneous compliance therewith.
  2. Department commanders will use efforts to make this order effective.

By order of

JOHN A. LOGAN,
Commander-in-Chief

N.P. CHIPMAN,
Adjutant General

Official:
WM. T. COLLINS, A.A.G.

Remember our Veterans

mischler financial veteran-owned broker-dealer-memorial-day-2017

Never forget those who made the ultimate sacrifice so that we can all do what we do every day.

God Bless our nation’s veterans and their families; God Bless you and your families and God Bless America!

Have a safe and wonderful Memorial Day weekend everyone!
Ron Quigley

 

Below please find my synopsis of everything Syndicate and Secondary from today’s debt capital markets, including the investment grade corporate bond data drill down as seen from my seat here in Syndicate, Sales and DCM.

NICs, Bid-to-Covers, Tenors, Sizes and Average Spread Compression from IPTs thru Launches

(more…)

Investment Grade Debt Commentary–Credit Tightening, Investor Appetite Voracious
May 2017      Debt Market Commentary   

Quigley’s Corner 05.12.17 – Credit Tightening, Investor Appetite Voracious

 

Investment Grade New Issue Re-Cap

Today’s IG Primary & Secondary Market Talking Points

Syndicate IG Corporate-only Volume Estimates This Week and May

The Best and the Brightest” FI Syndicate Forecasts and Sound Bites for Next Week 

NICs, Bid-to-Covers, Tenors, Sizes and Average Spread Compression from IPTs thru Launches

This Week’s IG New Issues and Where They’re Trading

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending May 10th         

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

 

What to do on a no-print Friday in the IG dollar DCM?  Well, how about speaking with the top 24 syndicate desks who underwrite over 80% of all debt issued in our market for starters?  I did just that as is done here in the “QC” each and every Friday.  Next week looks like a very robust one with sizeable upside potential. One syndicate guru noted we could see $40b next week and $150b for the month.  What your corner seer can tell you is that I wrote the following here in the “QC” on Friday April 28th, 2017:

“It’s a weary world folks! However, the good news is that U.S. Corporations are an anomaly. They’re doing just fine and foreign investment into the safe haven of” yieldier” investment grade rated products is immense and growing.  I expect a very robust May of $150-ish of all-in (IG Corporate plus SSA issuance).  Credit is grinding tighter and ……investor appetite is voracious……especially coming off such a noticeably slow April that ended on a high note. So, issuers line up!  Bankers man your stations and syndicate managers get ready because the best story in our world is Corporate America.”

The IG Corporate-only total for May is currently $72.638b and the all-in Corporate plus SSA total is $80.083b.  We have two solid weeks to go in May and if we repeat what we’ve done thus far – along with next week’s upside potential – I do think we hit $150b.  Now wouldn’t that be something…..AGAIN! But why listen to little ‘ole me when all those prestigious professionals manning their respective syndicate desks at the world’s biggest investment banks are patiently waiting for you to run through my recaps and move on to their numbers and thoughts for next week’s IG corporate issuance? They’re all there.  Hurry up and get to it because it’s Friday and people have places to go and people to see.

Below please find my synopsis of everything Syndicate and Secondary from today’s debt capital markets, including the investment grade corporate bond data drill down as seen from my seat here in Syndicate, Sales and DCM.

Ron Quigley, Managing Director and Head of Fixed Income Syndicate

 

Today’s IG Primary & Secondary Market Talking Points

 

  • BAML’s IG Master Index tightened 1 bp to +118 vs. +119.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS tightened 1 bp to 1.12 versus 1.13.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +161.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $17.9b on Thursday versus $19.8b on Wednesday and $17b the previous Thursday.
  • The 10-DMA stands at $16.9b.

 

Syndicate IG Corporate-only Volume Estimates This Week and May

 

IG Corporate New Issuance This Week
5/08-5/12
vs. Current
WTD – $33.67b
May 2017
Forecasts
vs. Current
MTD – $72.638b
Low-End Avg. $30.54b 110.25% $122.27b 59.41%
Midpoint Avg. $31.37b 107.33% $123.42b 58.85%
High-End Avg. $32.21b 104.53% $124.56b 58.32%
The Low $25b 134.68% $100b 72.63%
The High $41b 82.12% $150b 48.43%

 

The Best and the Brightest”  Syndicate Forecasts and Sound Bites for Next Week 

I am happy to announce that the “QC” once again received 100% unanimous participation from all 24 syndicate desks surveyed for today’s “Best & Brightest” edition!  19 of those participants are among 2017’s YTD top 20 ranked syndicate desks according to today’s Bloomberg’s U.S. IG U.S. Investment Grade Corporate Bond underwriting league table.  22 are in the top 25 of that same table. The 2017 League table can be found on your terminals at “LEAG” + [GO] after which you select (US Investment Grade Corporates).  The participating desks represent 81.91% of all IG dollar-denominated new issue underwriting as of today’s table share percentage which simply means they’re the ones with visibility.  But it’s not only about their volume forecasts, it’s also about their comments!  This core syndicate group does it best; they know best; so they’re the ones you WANT and NEED to hear from.  It’s a great look at the week ahead.

*Please note that these are Investment Grade Corporates only. They do not include SSA issuance unless otherwise noted.

 As always “thank you” to all the syndicate desks that participated in today’s survey.  I greatly appreciate your time to contribute and for making this edition of the “QC” among the most widely read! You are helping to promote Mischler’s value-added DCM proposition while adding readership to the “QC” that won Wall Street Letter’s Award as Best Broker Dealer Research in our financial services industry for three consecutive years! That’s 2014, 2015 and 2016…

My weekly technical data re-cap and question posed to the “Best and the Brightest” early this morning was framed as follows:

 
Here are this week’s IG new issue volume talking points:

 

  • The IG Corporate WTD total is now over 10% above this week’s syndicate midpoint average forecast or $33.67b vs. $31.37b.
  • MTD we’ve priced more than 58% of the syndicate projection for May or $72.63b vs. $123.42b.
  • The all-in MTD total (IG Corporates plus SSA) currently stands at $80.038b.
  • This week we breached the half trillion dollar mark for YTD IG Corporate-only issuance.
  • The YTD IG Corporate only volume is now $515.42b which is 7.22% more than a year ago to date.
  • YTD we priced $687.656b of all-in IG Corporate and SSA issuance which is 2.84% more than last year’s total at this point.

Here are this week’s five key primary market driver averages from the 42 IG Corporate-only deals that priced: 

o   NICS:  <0.20> bps

o   Oversubscription Rates: 2.72x

o   Tenors:  8.66 years

o   Tranche Sizes: $802mm

o   Spread Compression from IPTs to the Launch: <19.51> bps


Here’s how this week’s performance data compares against last week’s: 

  • Average NICs widened 0.20 bps this week to <0.2). vs. <0.40>.
  • Over subscription or bid-to-cover rates, the measure of demand, decreased 1.07x to 2.72x vs. 3.79x. 
  • Average tenors dramatically contracted by 3.28 years to 8.66 years vs. 11.94 years.
  • Tranche sizes decreased by $16mm to $802mm vs. $818mm.
  • Spread compression from IPTs to the launch/final pricing of this week’s 42 IG Corporate-only new issues tightened <1.87> bps to <19.51> bps vs. <17.64> bps.
  • Standard and Poor’s Investment Grade Composite Spreads tightened 1 bp to +161 vs. +162.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS thru this morning tightened 3 bps to 1.12 vs. 1.15. 
  • Week-on-week, BAML’s IG Master Index tightened by 3 bps to +118 vs. +121. 
  • Spreads across the four IG asset classes tightened 3.00 bps to 12.25 vs. 15.25 bps as measured against their post-Crisis lows. 
  • The 19 major industry sectors also tightened by 2.53 bps to 16.79 bps vs. 19.32 bps against their post-Crisis lows.
  • For the week ended May 10th, Lipper U.S. Fund Flows reported an inflow of $2.701b into Corporate Investment Grade Funds (2017 YTD net inflow of $51.877b) and a net outflow of $1.725m from High Yield Funds (2017 YTD net outflow of $6.091b).
  • Taking a look at the secondary trading performance of this week’s IG and SSA new issues, of the 46 deals that printed, 34 tightened versus NIP for a 74.00% improvement rate while 8 widened (17.50%) and 4 were flat (8.50%).

Entering today’s Friday’s session here’s how much we issued this week:

  • IG Corps: $33.67b
  • All-in IG (Corps + SSA): $39.42b

 

We’re in the midst of a Trump Slump. Former-FBI Chief Comey was fired by Trump despite the ongoing “From Russia With Love” investigation.  Russian Foreign Minister Lavrov is then invited into the Oval Office the next day while U.S. press is barred from the room. (Who will be sweeping the office for bugs and other devices?) You can’t make this stuff up folks.  There is a 100% chance of a June rate hike. North Korea continues to threaten its sixth nuclear test.  The French election is now behind us, but the new young President of Gaul has his hands full while Le Pen rebuilds, renames and rebrands her National Front Party with an eye on 2022.  The best story going, however, continues to be very strong U.S. corporate earnings as IG credit spreads grind tighter and tighter offering issuers great opportunities to print NOW!
 

The “Best and the Brightest” in Their Own Words

 

……..……and here are their formidable responses:

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Equities Market Commentary-A Goldilocks Market or a Teflon Market?; Peruzzi’s Perch
May 2017      Equities Market Commentary   

Peruzzi’s Perch Equities Market Commentary May 05 2017- VIX Messaging Goldilocks Market, Or a Teflon Market?

U.S markets close out a low volatility week with an important April jobs report on Friday. We seem to be in a Teflon market where both good and bad news alike just slide off the market. This either a Goldilocks market or a Teflon market.

larry-peruzzi-mischler-equitiies

Larry Peruzzi, Managing Director

The VIX index (good indication of volatility) hit a 10 year low on Monday at 10.11. In fact many have noted that the VIX trading curve looks very similar to 2007. In another indication of the low volatility the S&P 500 has not had a move of more than 20 bps over the last 7 sessions. Not that there has been a lack of new, quite the contrary between French elections, possible affordable health care plan overturned, North Korea, Apple hitting an all-time high, the Fed’s non actions and earnings investors have had plenty to digest. Q1 earning season is nearing an end with 78% of earnings reports beating forecast and 63% beating sales forecast. Wednesday the Fed decided not to raise rates and the statement was slightly more hawkish than we were expecting with the Fed suggesting it could still raise interest rates at its next meeting on June 14th.  Market expectations for a rate hike next month jumped to 75% from 60%, but much of this is contingent on a rebound in employment growth in April and May. Thursday was a great example of sector movements canceling each other out as financial stocks gained offsetting losses in telecom and energy shares as the price of crude oil fell below $45 a barrel. The question we all have is how long can this keep going?

Looking ahead to next week fist on the docket will be follow through to Friday’s job report and reaction both in Europe and the U.S to France’s presidential elections on Sunday. Polls indicate Emmanuel Macron has a 20 point lead on Marie LePen, but U.S and U.K voters are both well aware of how inaccurate polls can be lately. A Le Pen victory certainly would create some volatility, while Macron would be viewed as more of a status quo.

Cheap oil is coming back, with WTI crude at its lowest level in 13 months. We could see some continued pressure in the energy sector next week.  Keep an eye on Venezuela, a country that is nearly 100% dependent on oil revenue. Crude’s 2-year slide, as well as disastrous political decisions, has the country on the verge of collapse. This week’s EIA number added further importance. Japan will also return to work after three days of holidays.

Economic data is back loaded next week, with April PPI reading and jobless claims on Thursday and April CPI, April retail sales, Business inventories and Michigan sentiment closing out the week on Friday. Fed wise governors Bullard, Mester, Kashkari, Rosengren, Dudley, Evans, and Harker, all give speeches, but make no mistake about it; The Fed is looking at just 2 things: Jobs and inflation. Recently, both of those have not shown to be either hawkish or dovish. Washington will not be lacking any drama as the Senate GOP looks ready to overlook the House Obamacare repeal bill and write its own. If they find sometime a budget is needed to avoid another government shutdown later this year.  So call it a Goldilocks market or a Teflon market but until volatility returns brokers will continue to see low trading volumes. This will certainly result in lower earnings for the brokers in Q2.

 

Larry Peruzzi

Managing Director International Trading

Mischler Financial Group

Investment Banking | Institutional Brokerage

Larry Peruzzi is a 20 yr global trading markets veteran and brings a unique perspective to global equities market commentary via Mischler Financial Group, the securities industry’s oldest minority broker-dealer owned and operated by service-disabled veterans.  Larry’s experience  and best execution perspective stems from his sitting on ‘both sides of the aisle.’  For more than half of Larry’s career, he ran buy-side trading desks for Standish Mellon and thereafter, The Boston Company. In both of those roles, Larry was responsible for implementing and managing international equities trade execution. Larry’s perspectives are frequently cited by the leading financial news publishers, including The Wall Street Journal, Bloomberg LP and Reuters

Mischler End of Week Equities Market Commentary via Peruzzi’s Perch March 09 2017 end-of-week edition is distributed via email to institutional investment managers and Fortune Treasury clients of veteran-owned broker-dealer Mischler Financial Group, the investment industry’s oldest  minority broker-dealer owned and operated by Service-Disabled Veterans.

Peruzzi’s Perch is a weekly synopsis of Everything Equities as seen from the perch of Mischler Financial Group’s International Equities Desk. Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”, Peruzzi’s Perch is one of four distinctive content pieces produced by Mischler Financial Group (more…)

IG Corporate Debt Issuance Avalanche-Mischler Debt Market Commentary
May 2017      Debt Market Commentary   

Quigley’s Corner 05.02.17- IG Corporate Debt Issuance Avalanche; $16.6b Floated by 8 Issuers

 

Investment Grade New Issue Re-Cap – An Avalanche of Issuance

Today’s IG Primary & Secondary Market Talking Points

Global Market Recap

Syndicate IG Corporate-only Volume Estimates This Week and April

Barclays PLC $2b 11NC10 LT2 Subordinated Notes Deal Dashboard

NICs, Bid-to-Covers, Tenors, Sizes and Average Spread Compression from IPTs thru Launches

New Issues Priced

Indexes and New Issue Volume

Lipper Report/Fund Flows – Week ending April 26th         

IG Credit Spreads by Rating

IG Credit Spreads by Industry

New Issue Pipeline

M&A Pipeline

Economic Data Releases

Rates Trading Lab

Tomorrow’s Calendar

 

I wrote this last Friday to close out my Best and Brightest commentary:

“Bankers man your stations and syndicate managers get ready because the best story in our wounded world is Corporate America. Next week, however, will feature a couple very congested days given that the U.K., EU, China and Australia are closed on Monday in observance of EU Labor Day; there’s FOMC Wednesday and an NFP Friday ahead.  So, not much on those days but it should make for a crowded Tuesday and Thursday.”

Today, Tuesday lived up to the billing.  The IG Corporate DCM hosted 8 issuers across 21 tranches totaling $16.675b in volume.  No help came the SSA space as it wisely stood down.

  • The IG Corporate WTD total is now 73.5% of this week’s syndicate midpoint average forecast or $21.025b vs. $28.58b.
  • MTD we’ve now priced nearly 17% of the IG Corporate mid-range syndicate projection for April or $21.025b vs. $123.42b.
  • Meanwhile the IG pipeline is building with 8 IG Yankee and SSA new issues lining up and either ready to go, road showing or conducting investor calls.
    (Please scroll way below for the New Issue Pipeline).

Of all those transactions the one nearest and dearest to our nation’s oldest Service Disabled Veteran broker dealer was Barclays PLC’s first subordinated callable issue.  That is my featured Deal-of-the-Day and you know what that means – Mischler served as an active Co-Manager on the transaction.  First let’s get to the re-caps – both primary and global – and then it’s onto BACR!

Thanks for tuning in and remember, Corporate America IS the defacto best story going in our inextricably linked global economy and new world order.

Today’s IG Primary & Secondary Market Talking Points

  • Mid-America Apartments LP upsized today’s 10-year Senior Unsecured Notes new issue to $600mm from $450mm at the launch and at the tightest side of guidance.
  • The average spread compression from IPTs and/or guidance thru the launch/final pricing of today’s 21 IG Corporate-only new issues was <18.31> bps.
  • BAML’s IG Master Index was unchanged at +123.  +106 represents the post-Crisis low dating back to July 2007.
  • Bloomberg/Barclays US IG Corporate Bond Index OAS was unchanged at 1.16.
  • Standard & Poor’s Investment Grade Composite Spread was unchanged at +164.  The +140 reached on July 30th 2014 represents the post-Crisis low.
  • Investment grade corporate bond trading posted a final Trace count of $12b on Monday versus $16.2b on Friday and $16.1b the previous Monday.
  • The 10-DMA stands at $16.6b.

Global Market Recap

 

  • U.S. Treasuries – USTs traded with a bid today on Trump, crude oil & vehicle sales.
  • Overseas Bonds – JGB’s lost ground. Europe closed mixed with more red than green.
  • 3mth Libor – set at 1.17372% the highest since 4/1/09.
  • Stocks – Mixed heading into the last 15 minutes of trading.
  • Overseas Stocks – Asia closed with gains except China. Europe had a good day.
  • Economic – Vehicle sales were weak. ADP & FOMC Statement tomorrow.
  • Overseas Economic – PMI’s in China & Japan were weaker. Europe PMI’s were strong.
  • Currencies – USD better vs. Yen & CAD, weaker vs. the Euro & Pound and unchanged vs. the AUD.
  • Commodities – Terrible day for crude oil.
  • CDX IG: -0.17 to 63.21
  • CDX HY: +0.50 to 324.17
  • CDX EM: -4.41 to 190.71

*CDX levels are as of 3:30PM ET today.

-Tony Farren

 

Syndicate IG Corporate-only Volume Estimates This Week and April

 

IG Corporate New Issuance This Week
5/01-5/05
vs. Current
WTD – $21.025b
May 2017
Forecasts
vs. Current
MTD – $21.025b
Low-End Avg. $27.96b 75.20% $122.27b 17.20%
Midpoint Avg. $28.58b 73.57% $123.42b 17.04%
High-End Avg. $29.21b 71.98% $124.56b 16.88%
The Low $20b 105.12% $100b 21.02%
The High $36b 58.40% $150b 14.02%

Below please find my synopsis of everything Syndicate and Secondary from today’s debt capital markets, including the investment grade corporate bond data drill down as seen from my seat here in Syndicate, Sales and DCM.

Have a great evening!
Ron Quigley, Managing Director, Head of Fixed Income Syndicate

Barclays PLC $2b 11NC10 LT2 Subordinated Notes Deal Dashboard

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Risk Appetites Sour as News Cycle Confounds, But US Equity Markets Remain Stable; Mischler Commentary
April 2017      Equities Market Commentary   

Peruzzi’s Perch 04.07.17 Risk Appetites Sour, But US Equity Markets Remain Stable

 

larry-peruzzi-mischler-equitiies

Larry Peruzzi

As we head into Friday, U.S equity markets find themselves little changed from last Friday.

It’s peculiar given the pace of news coming out of Washington and the Fed. What is becoming apparent is that risk appetite is souring, but there is apparently enough optimism to keep the markets in a status quo pattern.

It’s interesting that the VIX index trading range has been between 10.58 and 13.22 the entire year to date.  Friday will look to change that as three big events continue to take shape. First, Senate Republicans enacted the “Nuclear Option” to get Neil Gorsuch on the threshold of the Supreme Court. Second, on Thursday night the U.S. launched a missile strike into a Syria Government controlled military facility located in Idlib Provence in response to the earlier in the week chemical weapon sarin gas attack that brutally killed dozens of innocent civilians. Thursday night’s missile strikes immediately rallied crude oil pricing by as much as 2% and investors moved into the safety of bonds With that, Trump’s vision of improved Russian relations became increasingly foggy.

Finally, as this note is being published in advance of market open, Friday morning financial markets and investors will focus on March payrolls, which will likely be buffeted by the economic numbers over the week, which showed some modest improvement in ISM Employment, ADP employment change and Durable goods orders. A decline in March Auto sales is worth keeping an eye on. The decline may be rate-related, as higher interest rates take away a major sales incentive. Before Thursday’s night’s missile attack and Friday’s employment report the largest event was Wednesday’s release of the March 15th FOMC meeting minutes. Coming on the heels of Jeffrey Lacker’s surprise resignation, the Fed signaled it is planning on unwinding some balance sheet positions and they are looking at a 2H rate increase. The result was the S&P 500 and Dow posting their biggest one-day reversal since February 2016 on Wednesday.

Looking ahead to the Easter shorten week, the economic and earnings calendar are light. Highlights economically on Thursday are March PPI numbers and April’s Michigan sentiment readings. 1Q earnings season begins the following week. Just a handful of earnings are due for Thursday, which include PNC financial, JP Morgan, Wells Fargo and Citigroup.  Federal Reserve Chair Janet Yellen speaks at the University of Michigan’s Ford School of Public Policy and will take questions from the audience on Monday in a quite week for Fed watchers.

With the exception of the constant flow of news out of Washington, the markets will be digging for actionable news and direction. The importance of 1Q earnings cannot be overlooked. With Affordable Care Act version 2.0 dead and comments from Washington that “a new tax plan is quite some time away”,  investors will need to see earnings growth to justify current valuations. Lack of earnings growth could certainly trigger the “Sell in May and go away” strategy, but would an executive order here, and a nuclear option there be enough to keep investors hanging in the market?

Whatever you do to gain success, you have to hang in there and hope good things happen. “Always think positive.” Don Rickles May 8, 1926 – April 6, 2017

 

Larry Peruzzi

Managing Director International Trading

Mischler Financial Group

Investment Banking | Institutional Brokerage

Ph:   1-617-420-8472

Larry Peruzzi is a 20 yr global trading markets veteran and brings a unique perspective to global equities market commentary via Mischler Financial Group, the securities industry’s oldest minority broker-dealer owned and operated by service-disabled veterans.  Larry’s experience  and best execution perspective stems from his sitting on ‘both sides of the aisle.’  For more than half of Larry’s career, he ran buy-side trading desks for Standish Mellon and thereafter, The Boston Company. In both of those roles, Larry was responsible for implementing and managing international equities trade execution. Larry’s perspectives are frequently cited by the leading financial news publishers, including The Wall Street Journal, Bloomberg LP and Reuters

Mischler End of Week Equities Market Commentary via Peruzzi’s Perch March 09 2017 end-of-week edition is distributed via email to institutional investment managers and Fortune Treasury clients of veteran-owned broker-dealer Mischler Financial Group, the investment industry’s oldest  minority broker-dealer owned and operated by Service-Disabled Veterans.

Peruzzi’s Perch is a weekly synopsis of Everything Equities as seen from the perch of Mischler Financial Group’s International Equities Desk. Cited by Wall Street Letter in each of 2014, 2015 and 2016 for “Best Research / Broker-Dealer”, Peruzzi’s Perch is one of four distinctive content pieces produced by Mischler Financial Group.

(more…)

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